2024=STOCKHOLDER

The revenue recognition principle provides that revenue is recognized when

a. it is realized.

b. it is realizable.

c. it is realized or realizable and it is earned.

d. none of these.

• A

• B

• C

• D

When goods or services are exchanged for cash or claims to cash (receivables), revenues are

a. earned.

b. realized.

c. recognized.

d. all of these.

• A

• B

• C

• D

When the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues, revenues are

a. earned.

b. realized.

c. recognized.

d. all of these.

• A

• B

• C

• D

Which of the following is not an accurate representation concerning revenue recognition?

a. Revenue from selling products is recognized at the date of sale, usually interpreted to mean the date of delivery to customers.

b. Revenue from services rendered is recognized when cash is received or when services have been performed.

c. Revenue from permitting others to use enterprise assets is recognized as time passes or as the assets are used.

d. Revenue from disposing of assets other than products is recognized at the date of sale.

• A

• B

• C

• D

The process of formally recording or incorporating an item in the financial statements of an entity is

a. allocation.

b. articulation.

c. realization.

d. recognition.

• A

• B

• C

• D

Dot Point, Inc. is a retailer of washers and dryers and offers a three-year service contract on each appliance sold. Although Dot Point sells the appliances on an installment basis, all service contracts are cash sales at the time of purchase by the buyer. Collections received for service contracts should be recorded as

a. service revenue.

b. deferred service revenue.

c. a reduction in installment accounts receivable.

d.a direct addition to retained earnings.

• A

• B

• C

• D

Which of the following is not a reason why revenue is recognized at time of sale?

a. Realization has occurred.

b. The sale is the critical event.

c. Title legally passes from seller to buyer.

d.All of these are reasons to recognize revenue at time of sale.

• A

• B

• C

• D

The residual interest in a corporation belongs to the

a. management.

b. creditors.

c. common stockholders.

d. preferred stockholders.

• A

• B

• C

• D

Dividends are not paid on

a. noncumulative preferred stock.

b. nonparticipating preferred stock.

c. treasury common stock.

d. Dividends are paid on all of these.

• A

• B

• C

• D

Noncumulative preferred dividends in arrears

a. are not paid or disclosed.

b. must be paid before any other cash dividends can be distributed.

c. are disclosed as a liability until paid.

d.are paid to preferred stockholders if sufficient funds remain after payment of the current preferred dividend.

• A

• B

• C

• D